Fu v. Yan et al

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UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
In re
DEMAS WAI YAN,
aka DENNIS YAN, Debtor.
TONY FU, an individual,
Plaintiff,
vs.
DEMAS YAN, an individual,
d/b/a YAN LAW OFFICE,
Defendant.
___________________________________________
DEMAS YAN, an individual,
and YAN LAW OFFICE,
Cross-Plaintiff,
vs.
TONY FU aka DONG XING FU, CRYSTAL LEI aka
LI MING LEI, STELLA HONG CHEN aka HONG
XING FU aka HONG XING CHEN, BRYANT FU
and WEI SUEN,
Cross-Defendants.
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Case No. 04-33526 TEC
Chapter 7
Adv. Proc. No. 10-3152 TC
MEMORANDUM RE DEBTOR’S MOTION TO ALTER OR AMEND THE COURT’S
FEBRUARY 18, 2011 ORDER RE RULE 12(B)(6) MOTIONS AND MOTION TO REMAND
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Signed and Filed: March 30, 2011
________________________________________
THOMAS E. CARLSON
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
April 04, 2011
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 10-03152 Doc# 50 Filed: 03/30/11 Entered: 04/04/11 10:47:30 Page 1 of 3

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Demas Yan’s motion to alter or amend the court’s February 18, 2011 order is denied, because
Yan has not established that the court committed an error of law or any other cognizable basis for
modifying the order. This memorandum shall constitute the court’s findings of fact and conclusions
of law.
FACTS
On February 18, 2011, the court signed an order (Order) dismissing the cross-complaint filed
by Demas Yan (Yan) and removed to this court by cross-defendant Stella Chen, because the cross
complaint asserted prepetition claims that belonged to the estate and that were not abandoned by the
estate to Debtor. 1 The Order established a deadline of February 28, 2011 for Yan to file an amended
cross-complaint that alleged claims arising out of postpetition events, and that specified clearly the
facts giving rise to wholly postpetition claims. The Order additionally provided that the cross-
complaint would be dismissed with prejudice if Yan failed timely to file an amended cross
complaint.
Yan did not file an amended cross-complaint. Instead, pursuant to Fed. R. Civ. Proc. 59(e),2
Yan filed a motion to alter or amend the Order. Like Yan’s opposition to the Rule 12(b)(6) motions
to dismiss, the motion for reconsideration argues that: (1) the claims are not prepetition claims,
because the cross-defendants engaged in a pattern of tortious conduct that began prepetition and
continued until after the case was converted to chapter 7; and (2) the claims are state-law claims over
which this court has no jurisdiction.
DISCUSSION
Reconsideration and amendment of an order is “an extraordinary remedy, to be used
sparingly in the interests of finality and conservation of judicial resources. . . [and] should not be
granted, absent highly unusual circumstances, unless the district court is presented with newly
discovered evidence, committed clear error, or if there is an intervening change in the controlling
1 In addition, the cross-claims against Chen, Lei, and Suen had been released by the chapter
7 trustee, and the cross-claims against Tony Fu were barred by the principles of issue and claim
preclusion.
2 Fed. R. Civ. Proc. 59(e) applies in Bankruptcy Cases. Fed. R. Bankr. Proc. 9023.
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Case: 10-03152 Doc# 50 Filed: 03/30/11 Entered: 04/04/11 10:47:30 Page 2 of 3

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law.” Kona Enterprises, Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000) (citations
omitted).
Yan’s motion to amend the Order must be denied, because he has not established that the
Order is based on a clear error or that there has been an intervening change in controlling law. 3 The
Order did not determine that no postpetition conduct underlies the cross-claims. Rather, the Order
determined that the postpetition conduct was not pled with sufficient particularity for the court to
separate the postpetition claims from the prepetition claims, which remained property of the estate,
and which will continue to remain property of the estate after the bankruptcy case is closed. The
court gave Yan ten days leave to amend the cross-complaint to specify clearly the facts giving rise to
the postpetition claims. Yan elected not do so. Therefore, as pled, and for the reasons stated in the
court’s February 18, 2011 memorandum decision, the cross-claims do not allege any postpetition
claims with sufficient particularity to state a claim upon which relief can be granted. Because Yan
has not established that the Order is based on a clear error, and because oral argument would not be
helpful to the court in determining the motion for reconsideration, the court denies the motion and
vacates the hearing on the motion.
**END OF MEMORANDUM**
3 Yan does not contend that there is newly discovered evidence.
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Case: 10-03152 Doc# 50 Filed: 03/30/11 Entered: 04/04/11 10:47:30 Page 3 of 3